Overall Facebook is a strong company with great numbers. Including 59% YoY revenue growth, 16 quarters beating earnings estimates, and 2 billion searches per day.

Below is a simple chart of Facebook, 2 days after they crushed earnings. Shown is a 6 month, daily chart using Japanese candlesticks, one of my favorite. Japanese candlesticks can tell a lot when used with other indicators.

Observe the static cycle notated with cycle highs. If Facebook responds to this cycle, it should run into resistance right now using time. I have drawn 4 trendlines on the chart as well, 2 acting as support and 2 acting as resistance. The current one is acting as support.

At the bottom of the chart is a common oscillator currently suggesting momentum is slowing with a bearish divergence.

To sum up, we have a common cycle, trendline support with resistance above, and divergence showing up. This is the trade set-up. 2 ways you can play this, short now with a stop above the current high, or wait for a break of the trendline. Everyone has their own style but make sure you have an exit strategy in case the stock moves in the wrong direction.

DoublePlayOptions does not trade individual stocks, instead focuses on trading the main indexes and etfs that track them. Send an email to admin@doubleplayoptions.com for your next free options play or click here Email If you do not double on the options play, let me know and I will give you a free month of service.

Joseph VanDerveer is the Chief Technical Analyst with 8 years experience in the trenches trading the markets with a brand new website and service at www.doubleplayoptions.com

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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